SCHEDULING CLAIM ANALYSIS: A COMPREHENSIVE SCHEDULE RELATED

CLAIMS OF CONTRACT ADMINISTRATION FOR CONSTRUCTION INDUSTRY

ZAHIDAH BINTI JAHIDI

Thesis submitted in fulfillment of the requirements

for the award of the degree of

Bachelor of Project Management with Honors

Faculty of Technology

UNIVERSITI MALAYSIA PAHANG

FEBRUARY 2014

vi

ABSTRACT

As the construction industry rapidly grows in Malaysia and contributes to our nation’s

economic growth, it plays a very important role in the development of our country. The

accuracy and completion of the project schedule is important to the early and successful

resolution of the schedule delay claim issues. In advance, the causes that contribute to

the schedule related claims need to be identified as it will be very helpful in the

resolution process from the bottom of the issue. Besides, the adjustment or delay on

project schedule that might causes delay claims need to be highlighted by the

scheduling practitioners. As this research will study the scheduling claims from the

different points of view of project parties (contractors and clients), the questionnaires

are extremely critical components as the instrument for this research process. In

addition, the data analysis was conducted accordingly from the process of identifying

and notifying the contract claims, followed by the determination of the causes of

schedule related contract claims and lastly the determination of key elements for a

strong schedule related contract claims. The outcomes of this research show that the

delays in construction and completion of the contract itself is the main causes that

usually lead to a schedule related construction claims. This may due to the incomplete

contract, which is the main thing as an agreement in the project. The potential causes to

the schedule related contract claims identified in this research are ranked as; 1.Delays in

construction and completion of the contract, 2.Incomplete and defective work, and

3.Abnormal or unusual weather conditions. Identify and rank the key elements for a

strong schedule related contract claims is the second objective for this research to be

conducted. These elements are important in order to obtain a clear and good claim as it

is the characteristics that need to be considered and implemented in constructing a

schedule related contract claims. The data analyzed find out that the outmost key

element that need to be implemented in a strong schedule related contract claims is

reviewing and understanding the contract itself in order to determine whether the

contract allows for an extension of time and compensation. It means a clear

understanding regarding the project’s contract will definitely makes a contract claims

stronger. While the other key elements identified are ranked as; 1.Review and

understand the contract to determine whether the contract allows for an extension of

time and compensation, 2.Notice (either actual or constructive) of the delay must be

given, and 3.Determination of the critical path is often required for the calculation of

delay damages.

vii

ABSTRAK

Industri pembinaan yang pesat membangun di Malaysia juga merupakan penyumbang

kepada pertumbuhan ekonomi negara kita. Ketepatan dalam penyiapan jadual projek

adalah penting untuk resolusi awal dan penting dalam menanggani isu-isu tuntutan

akibat kelewatan jadual. Terlebih dahulu, sebab-sebab yang menyumbang kepada

tuntutan berkaitan perlu dikenal pasti kerana ia akan sangat membantu dalam proses

penyelesaian dari bahagian bawah isu itu. Selain itu, pelarasan atau kelewatan jadual

projek juga mungkin manjadi sebab-sebab kelewatan tuntutan. Kajian ini akan mengkaji

tuntutan penjadualan dari pespektif yang berbeza dari pihak projek (kontraktor dan

pelanggan), dan soal selidik merupakan komponen yang amat kritikal sebagai instrumen

dalam proses kajian ini. Di samping itu, analisis data yang telah dijalankan dengan

sewajarnya bermula dari proses mengenal pasti punca-punca tuntutan kontrak jadual

yang berkaitan dan akhir sekali penentuan elemen utama bagi tuntutan kontrak. Hasil

kajian ini menunjukkan bahawa kelewatan dalam pembinaan dan penyiapan kontrak itu

sendiri adalah punca utama yang biasanya membawa kepada tuntutan pembinaan jadual

yang berkaitan. Ini mungkin disebabkan kontrak yang tidak lengkap , yang merupakan

perkara utama sebagai perjanjian dalam projek tersebut. Punca-punca yang berpotensi

untuk tuntutan kontrak jadual berkaitan yang dikenal pasti dalam kajian ini adalah

disenaraikan seperti ; 1.Penangguhan dalam pembinaan dan penyiapan kontrak, 2.tidak

siap ataupun kerja yang rosak, dan 3.Keadaan cuaca yang luar biasa. Manakala elemen-

elemen yang penting dalam usaha untuk mendapatkan tuntutan yang jelas dan baik juga

perlu kerana ia adalah ciri-ciri yang perlu dipertimbangkan dan dilaksanakan dalam

membina tuntutan kontrak jadual yang berkaitan. Data dianalisis menunjukkan bahawa

elemen kunci perlu dilaksanakan dalam kontrak jadual berkaitan serta dengan

memahami kontrak itu sendiri untuk menentukan sama ada kontrak itu membolehkan

untuk melanjutkan masa dan pampasan. Elemen-elemen utama yang dikenal pasti

adalah disenaraikan seperti berikut; 1.Membaca dan memahami kontrak untuk

menentukan sama ada kontrak itu membolehkan untuk melanjutkan masa dan

pampasan, 2.Notis (sama ada sebenar atau konstruktif) mengenai kelewatan mesti

diberi, dan 3. Penentuan laluan kritikal sering diperlukan untuk pengiraan ganti rugi

kelewatan.

viii

TABLE OF CONTENTS

Page

SUPERVISOR’S DECLARATION ii

STUDENT’S DECLARATION iii

DEDICATION iv

ACKNOWLEDGEMENTS v

ABSTRACT vi

ABSTRAK vii

TABLE OF CONTENTS viii

LIST OF TABLE xi

LIST OF FIGURES xii

LIST OF ABBREVIATIONS xiii

CHAPTER 1 INTRODUCTION TO THE RESEARCH

1.1 INTRODUCTION 1

1.2 RESEARCH BACKGROUND 1

1.3 PROBLEM STATEMENT 2

1.4 RESEARCH OBJECTIVES 4

1.5 RESEARCH QUESTIONS 4

1.6 SCOPE OF STUDY 5

1.7 SIGNIFICANCE OF RESEARCH 5

1.8 EXPECTED RESULT 5

1.9 SUMMARY 6

CHAPTER 2 LITERATURE REVIEW

2.1 INTRODUCTION 7

2.2 PROJECT MANAGEMENT 7

2.3 CONSTRUCTION INDUSTRY 9

2.4 CONTRACT ADMINISTRATION 11

2.5 CONTRACT CLAIMS 14

2.6 SCHEDULE RELATED CONSTRUCTION CLAIMS 23

ix

2.7 SCHEDULING CLAIMS ANALYSIS 26

2.8 SUMMARY 31

CHAPTER 3 RESEARCH METHODOLOGY

3.1 INTRODUCTION 33

3.2 RESEARCH OBJECTIVES 33

3.3 RESEARCH QUESTIONS 34

3.4 RESEARCH DESIGN 34

3.5 DATA COLLECTION METHOD 35

3.5.1 Source of Data 35

3.5.2 Primary Data 36

3.6 POPULATION AND SAMPLING 36

3.6.1 Sampling Procedure 37

3.6.2 Sampling Approach 38

3.7 QUESTIONNAIRE DESIGN 38

3.7.1 Developing Questionnaire 39

3.7.2 Section A: Demography Questions 40

3.7.3 Section B: Construction Contract Claims 40

3.8 DATA ANALYSIS 40

3.8.1 The Analysis Method 41

3.8.2 Section A: Demography Questions 41

3.8.3 Section B: Construction Contract Claims 42

3.9 RELIABILITY AND VALIDITY 42

3.9.1 Pilot Survey 42

3.10 SUMMARY 43

CHAPTER 4 RESEARCH FINDINGS AND ANALYSIS

4.1 INTRODUCTION 44

4.2 QUESTIONNAIRE DISTRIBUTION 45

4.3 RELIABILITY OF MEASUREMENT 46

x

4.4 NORMALITY TEST 47

4.5 RESPONDENT PROFILE 48

4.6 CONSTRUCTION CLAIMS IDENTIFICATION AND

NOTIFICATION 50

4.7 THE POTENTIAL CAUSES OF SCHEDULE RELATED

CONTRACT CLAIMS 52

4.8 THE KEY ELEMENTS OF STRONG SCHEDULE RELATED

CONTRACT CLAIMS 55

4.9 SCHEDULE RELATED CONTRACT CLAIMS IN CONTRACT

ADMINISTRATION AND PROJECT MANAGEMENT 59

4.10 SUMMARY OF FINDINGS 61

CHAPTER 5 CONCLUSIONS AND RECOMMENDATIONS

5.1 INTRODUCTION 62

5.2 LIMITATIONS 62

5.3 SCHEDULE RELATED CONSTRUCTION CLAIMS IN

CONTRACT ADMINISTRATION 63

5.4 RECOMMENDATIONS 65

REFERENCES 67

APPENDICES

A Gantt Chart 72

B Sample of Questionnaire 74

C Normality Test Result (Data Dispersion Graph) 78

xi

LIST OF TABLES

Table No. Title Page

2.1 Major Projects in Malaysia 9

4. 1 Questionnaires' Respond Rate 46

4. 2 Reliability Test Result 47

4. 3 Test of Normality 48

4. 4 Summarized Respondents' Profile 50

4. 5 Summary of Identification and Notification of

Construction Claims 51

4. 6 The Potential Causes of Schedule Related Contract

Claims 54

4. 7 The Key Elements of Strong Schedule Related Contract

Claims 57

4. 8 Schedule Related Contract Claims in Contract

Administration and Project Management 60

xii

LIST OF FIGURES

Figure No. Title Page

2.1 Causes of Claims in Contract Administration 18

4. 1 The Potential Causes of Schedule Related Contract

Claims 55

4. 2 The Key Elements of Strong Schedule Related Contract

Claims 59

xiii

LIST OF ABBREVIATIONS

CI Construction Industry

CPM Critical Path Method

GDP Gross Domestic Product

MYR Malaysian Ringgit

PERT Project Evaluation and Review Technique

PMBOK Project Management Body of Knowledge

PMI Project Management Institute

1

CHAPTER 1

INTRODUCTION TO THE RESEARCH

1.1 INTRODUCTION

Every project has unique and different characteristics. However, every each of

them have same target towards successfulness by ensuring their client‘s satisfaction on

the project. According to Ashworth (1991) a project is successful if the building is

delivered at the right time, at the appropriate price and quality standards. Successful

projects are influenced by the project phase‘s completion by the workforce which is the

main resource of a project. As stated in The Construction Contract Administration

Practice Guide (2011), the successful project is a project that completed on schedule,

within budget, and cleared with all claims.

Thus, in order to have a successful project, a project manager needs to avoid

any claim that might be issued while completing the project on time. On the other hand,

a prolonged or delayed project may lead to the construction claim issued which will

affect both client and contractor. Therefore, this research was conducted to study on the

schedule related contract claim of a project and the elements that need to be considered

in facilitate the preparation of valid schedule related claims in Malaysian construction

industry.

1.2 RESEARCH BACKGROUND

The construction industry is well known as a project-based industry in which

construction firms form temporary project organizations to develop, perform and

complete projects (Loosemore et al., 2006). The project manager in the construction

2

industry faced numbers of complex activities throughout the project, hence they need to

be carefully planned and executed every project phases to avoid any problems

happened. Such incident may cause project delay as well as the extended completion

duration. Project delay is a nightmare for every project manager since it may lead to

construction contract issues such as project prolongation claim. So, it requires extra

precaution by outlining the obligations and legal rights for project participators to have

an inevitable project outcome (Awad, n.d). Moreover, a contract claim due to project

delay can be the largest and most frequent type of claim on construction project (Peter

and John, 2009).

On the other hand, Peter and John (2009) mentioned that one of the most

common claims in respect of construction contracts is that for additional payment as a

result of delays to the contract works resulting in a delay to the contract completion date

of that particular project. Thus, in considering of preventing the losses from such time-

related cost, a good project negotiator needs to tackle the claim management problems

that normally occur starting from the early stage of a project until the project

completion.

1.3 PROBLEM STATEMENT

As the construction industry rapidly grows in Malaysia and contributes to our

nation‘s economic growth, it plays a very important role in the development of our

country. Unfortunately, construction industry in the country is facing issues such as

poor performance of time and cost, construction waste, as well as poor productivity

which these may lead to project delay. Intan, Akintoye and Kelly (2009) reported that

only 20.5% of the public projects and 33.35% of the private sector projects were

completed within the time. Such critical problems in construction industry may lead to

issues that might arise in the project contract administration. Furthermore, as claimed by

Murali and Yau (2006), disputes, arbitration, litigation, and total abandonment are

examples of delay effects.

Therefore, the implementation of the appropriate processes and procedures of

the project contract administration will help in facilitating the early resolution of

3

schedule related disputes and claims (The Construction Contract Administration

Practice Guide, 2011). The accuracy and completion of the project schedule is

important to the early and successful resolution of the schedule delay claim issues. In

advance, the causes that contribute to the schedule related claims need to be identified

as it will be very helpful in the resolution process from the bottom of the issue.

Besides, the adjustment or delay on project schedule that might causes delay

claims need to be highlighted by the scheduling practitioners. Vidogah and Ndekugri

(1998) had highlighted problems in claims management such as contractor‘s

management information systems are ill-designed to support claims; products of basic

good management practice, such as diaries, timesheets and programmes, often are

inadequate in content even if available; and some aspects of the claims are impossible to

quantify with a precision even when the best information is available. These problems

need to be avoided in preparing for a construction contract claims.

As stated by Jim and Fred (2009) ―There are no winners in delay.‖ Both the

project owner and the contractors suffer when there is a project delay: the loss of

productive use of the project facility or product; increased finance costs both direct and

indirectly; extended staffing costs and contractor overheads; the list goes on. If the

project is delayed to the stage of dispute resolution, there are the costs for attorneys,

claims consultants, depositions, discovery, mediation, arbitration, and litigation. Very

rarely will anyone recover the full costs for those time impacts and none of these

dispute resolution costs will bring back the project time that was lost. Therefore,

professional schedulers need to be more effective in developing and using the Critical

Path Method (CPM) schedule as a tool not only to get the project completed on time,

but also to communicate to all of the project stakeholders the delay issues.

Furthermore, a schedule delay claim might be very useful and in contract

administration and it will be more helpful to identify any potential causes as it can be

used to minimize the potential of the project incurring unanticipated schedule related

claims. During schedule development as well as by diligently performing specific

actions during the project execution phase, the scheduler enables the project to provide

4

an as-built schedule that can be validated to the project records to be an effective tool to

facilitate the preparation for and/or defence of a schedule related claim.

Therefore, this research will be conducted to study on the factors contribute to

schedule related claims and look for the main elements of a strong schedule related

contract claims.

1.4 RESEARCH OBJECTIVES

The objectives to be met in this study are:

i. To determine the main potential causes of schedule related contract claims.

ii. To identify the key elements in developing strong and firm schedule related

contract claims.

1.5 RESEARCH QUESTIONS

This research is conducted to answer questions as following:

i. Does the contract claims affecting the project management process in

construction industry?

ii. What are the potential issues that may cause construction contract claims?

iii. Do the schedule related contract claims give advantages in construction

contract administration?

iv. What are the key elements in order to obtain a valid and strong schedule

related contract claims?

v. Does the Critical Path Method helpful to be used in the schedule related claims

in construction contract administration?

5

1.6 SCOPE OF STUDY

This research is focussing on:

i. Schedule related contract claim only in construction contract administration.

ii. Project scheduling in the construction‘s project life cycle.

iii. Time matter in project scheduling, without involving price analysis.

iv. Residential construction industry in Bintulu, Sarawak.

v. The potential respondents of this research are parties in a project, which are

project clients and contractors.

1.7 SIGNIFICANCE OF RESEARCH

Changes of tasks that normally occur in construction projects such as delays in

construction projects need to be monitored properly as it involves every party involved

in the agreement and also may bring losses to them. As the changes in project may lead

to contractual issues in their business, it needs a strong and valid solution in terms of

contractual law in that particular industry. This research of schedule related contract

claims in construction industry will benefits construction contract administration

practitioners as well as project-related practitioners especially in construction industry

as it study varies causes of schedule related contract claim and hence obtaining the key

elements of a strong and firm contract claim.

1.8 EXPECTED RESULT

Generally in a project, the clients are the party that gives requirements or

request for a project to be done with certain terms and condition. So, in this research,

the findings might shows that contract claims will be mostly claimed by the owner

against the contractor. This might due to main factors which are; failure of one or more

of the parties to perform in a timely manner then thereby delaying the other party,

abnormal or unusual weather conditions, project work prolongation, incomplete and

defective work and also defects in the design or documentation issued for a project.

6

In the process of negotiating the claims, the importance of CPM used in

schedule related claims in construction contract administration will be proven by the

end of this research. It will be more useful by ensuring these elements are implemented

in the claims, and there are; a CPM analysis establishes whether or not delay has

occurred on the critical path, determination of the critical path is often required for the

calculation of delay damages, a contractor should review the contract to determine

whether the contract allows for an extension of time or both an extension of time as well

as compensation, negotiate or adjudicate the claim, as well as read and understand the

contract documents. By having the valid schedule related contract claims for a project, it

will helps in improving the project contract management in construction industry in

Malaysia.

1.9 SUMMARY

General idea of this research have been explained in this chapter, as it will lead

to the deeper elaboration regarding schedule related contract claims in construction

industry on the next chapter. The finding of this research would answer the research

questions and research objectives as stated.

7

CHAPTER 2

LITERATURE REVIEW

2.1 INTRODUCTION

This chapter will review and describe on the previous scholar‘s reviews which

related to this research. This research focussed on the scheduling claim of contract

administration in the area of project management. This section will discussed on the

contribution factors to the sources of construction contract claims, the potential causes

of schedule related contract claims and the key elements of obtaining strong and

successful schedule related contract claims within the construction industry.

2.2 PROJECT MANAGEMENT

Yang and Wang (2009) claimed that the complexity of the project are getting

larger with the professional fields involved in large-scale projects increasing nowadays

and the main parties involved in the project construction have increased their effort in

ensuring effective construction project management. The purpose is for a win-win

situation which is a difficult issue faced by managers at all levels of project

management in our country. In addition, a project always involved a single individual or

multiple individuals, a single organizational unit, or multiple organizational units from

multiple organizations.

Due to the potential for change, the development of the project management

plan plays an important role throughout the whole project‘s life cycle. These

progressive and crucial factors involved continuous improvement for a more detailed

and specific information as well as more accurate estimates became available.

8

According to Project Management Institute (PMI) as cited by Brewer Strahorn (2012),

this well-structured project management plan may help improve the understanding and

practice of project management by identifying, defining, documenting and championing

generally accepted project management practices and a common project management

lexicon. Hence, it allowed a project management team to define work and manage it to a

greater level of detail as the project evolves.

The project management criteria for success however are assessed in terms of

project completion within time and budget to the required quality (Pretorius et al. 2007).

Nowadays, one of the important issues in Project Management domain is forecasting

project time and cost (Iman and Ow, 2009). However, unexpected events and unplanned

environmental impact were common during project implementation. Planning,

executing, learning and experiencing are tightly connected in the mind-set of project

members and managers as the project is truly ambiguous and filled with unexpected

events created and things do not unfold as planned or because conditions change over

time (So¨derholm, 2008). The scholar also praised the amazing project managers that

practicing the art of ‗‗managing the unexpected‘‘ parallel to executing the plan to cope

with changes all the time,.

As example in construction industry, poor performance, such as time delays

and cost overruns, and quality defects are not uncommon in construction projects

(Meng, 2012 and Lo et al. 2006). Basically, the four most important factors that

contributed to this issue has been identified by Mansfield et al. (1994) as finance and

payment problems, poor contract management, changes in site conditions, and shortages

of materials. On the other hand, Assaf and Al-Hejji (2006) grouped nine categories of

delay factors as: project-related, client-related, design-related, contractor-related,

consultant-related, materials-related, labor-related, equipment-related, and external

factors.

As conclusion, every project is unique as they going through different

processes towards completion, and every project aims for a success delivery as

scheduled and within budgeted cost. A good project manager needs to tackle any issues

that might happen during a project execution. Besides, following an appropriate

9

guidelines and plan in project management knowledge is important in ensuring a

success project.

2.3 CONSTRUCTION INDUSTRY

As reported in International Construction Cost Survey (2012), the construction

sector in many countries is now very competitive and tendered prices often come in

below budget. The construction industry (CI) has played an important role in the

Malaysia economic growth. The industry has been consistently contributed

approximately 3% to 5% of the national Gross Domestic Product (GDP) (Shari, 2000,

Takim, 2005). Shown below is the list of major projects in Malaysia according to

International Construction Cost Survey 2012

Name of major projects MYR (in billion)

Support for Corridors 853

Greater KL Mass Rapid Transit 40

Kuala Lumpur International Financial District

(KLIFD) 26

Development of 1,084 hectare

Malaysian Rubber Board Land, Sungai Buloh 10

Warisan Merdeka 100-Storey Tower 5

Table 2.1: Major Projects in Malaysia

As a matter of fact, most of the project faced huge amount of time and cost

overrun (Aftab et al., 2012). They claimed that 92% of construction projects were

overrun and only 8% of project could achieve completion within contract duration, and

the major contributors of this poor performance include design and documentation

issues, financial resource management and project management and contract

administration issues.

In fact, the management of construction is complex enough without changes,

yet it is a familiar characteristic of in construction projects. To effectively manage

10

change, project managers have to undertake detailed planning; to integrate the work

activities of consultants, subcontractors and suppliers. Besides, changes that occur

during a project‘s development may have significant and often unpredictable effects on

its organization and management. Thus, project managers must react appropriately to

change and understand how it can influence the behaviour of the project system. Only

then any changes that happen can be managed effectively.

Knowing that construction project management is a unique discipline with its

own tools and techniques, traditional control mechanisms (such as Work Breakdown

Structure, Gantt Charts, PERT/CPM networks, Project Crashing Analysis, Trade-off

Analysis, etc.) are not entirely adequate for managing complex projects (Lovea et al.,

2002). As for the tasks rework in construction project, the two main causes that

contribute to this issue are changes and errors in the project. Moreover, design changes

are usually introduced to meet the requirements of any of the following customers:

i. Owner - to fulfil their expectations regarding e.g. the operability of the facility;

ii. Contractor - to enhance the constructability of the facility; or

iii. Supplier/fabricator(s) - e.g. to facilitate the use of existing standard products.

Clearly, design and construction changes may contribute to rework which it

can take the form of a variation claim if it directly influences a project‘s progress and

causes disruption (Lovea et al., 2002). Furthermore, construction project success is

usually measured by four typical success measures; cost, schedule, quality of

performance and safety (Hughes et al., 2004). Brown et al. (2001) suggest the major

factors contribute to the failure in many construction projects, which include:

i. Lack of integration that may exist between designers and builders;

ii. The use of innovative materials;

iii. The use of incorrect procurement systems;

iv. The condition of the general contracting market; and

v. The inherent ―uniqueness‖ of each new building project

11

Among all of these factors, most of the researchers agree that are the factor

that always happen relate to the labour: Labour supply & Labour productivity. While

other factor that also important that causes the delays construction: Shortage of

manpower (skilled, semi-skilled and unskilled labour) & Presence of unskilled labour.

Besides, Murali and Yau (2007) and Mohd (2010) agreed that normally, when the

projects are delayed, they are either extended or accelerated and therefore, incur

additional cost.

As a summary, construction industry and project management are inter-related

to each other and hence both of these play their role in ensuring the success of the

project. Besides that, the project manager should always be ready to wisely respond to

any constraints to come whether it is an expected event or unplanned event. The

outmost point of this issue is that the project manager need to keep in mind that project

delays in construction projects are frequently expensive, since there is usually a

construction loan involved which charges interest, management staff dedicated to the

project whose costs are time dependent, and on-going inflation in wage and material

prices (Mohd, 2010). In addition, it will surely cause contractual issues between client

and contractors and hence this may increase unnecessary additional cost into that

particular project.

2.4 CONTRACT ADMINISTRATION

The PMBOK (PMI Standards Committee, 2004) emphasized project

knowledge areas which procurement is one of the nine main knowledge areas, and

suggest several other procurement management processes. These processes include

procurement planning, solicitation planning, solicitation, source selection, contract

administration, and contract closeout. Project Procurement Management includes the

contract management and change control processes required to develop and administer

contracts or purchase orders issued by authorized project team members. This shows

that a contract is very important in delivering a successful complete project.

A contract in a process plays huge role in a construction project as it is a way

of creating a project organization (Turnera and Simister 2001). For instance, the

12

contract may ensure all works are conducted accordingly to the schedule and hence

might help generate project‘s productivity. As cited from Smith (1996) by Zhao and Yin

(2011), a valid contract management can enhance the project management performance

about 8 to 20 percent of the actual outcomes. Moreover, contract management is

identified by the creation and implementation of all contract documents, the

interpretation of which is a highly charged and intense effort. Rarely is the contract

administrator able to please all parties (Construction Contract Administration, 2011).

Construction management is also requires being a people, equipment, materials, and

environment manager.

However, revisions to the plans and specifications require ―change orders‖.

Change orders, once approved electronically in Site Manager may be implemented and

the approved amount of the contract is modified to reflect the changes. The change

order may request additional contract time (Construction Contract Administration,

2011). The Contractor must provide a letter requesting and justifying any additional

time. As quoted in Guideline for Establishing Construction Contract Duration (2010),

contract time is the maximum time allowed in the contract for completion of all work

contained in the contract documents. Contract time often arises as an issue when there is

too much time or too little time given in the contract.

As in contract time for a project, if too much time is allowed then the traveling

public is being inconvenienced and the contractor does not appear to be aggressively

pursuing the work. If not enough time is allowed then the contractor will submit claims

for added cost and time to the contract. Besides, contract time also arises as an issue

when the traveling public is being inconvenienced and the contractor does not appear to

be aggressively pursuing the work. There may be a number of reasons for a project to

appear dormant, such as weather limitations, concrete curing times and materials

arriving late (Gondy and Hildreth, 2007).

In addition to production rates, the following items should be considered

influencing the contract when determining contract time:

13

i. Effects of maintenance of traffic requirements on scheduling and the sequence

of operations

ii. Conflicting operations of adjacent projects, both public and private

iii. Time for reviewing false-work plans, shop drawings, post-tensioning plans,

mix designs

iv. Time to obtain necessary permits

v. Restrictions for night-time and weekend operations

vi. Time of the year of the letting as well as duration of the project.

This type of contract time determination techniques generally fall into the

categories of bar charts and CPM techniques. Bar Charts are advantageous as they are

simple to develop and easy to understand, and they offer a good method of determining

contract time. While CPM focuses on the relationship of the critical activities,

specifically, those which must be completed before other activities are started.

Furthermore, Shapiro et el. (2005) claimed that conflicts among owners,

design professionals and contractors are commonplace due the nature of the

construction referred to earlier. Thus, the essential elements in determining contract

time for most projects might be very helpful to be implemented in the project

management, there are; establishing production rates for all items, adopting production

rates to a particular project, understanding potential factors such as business closures,

environmental constraints and computation of contract time with a progress schedule or

other techniques (Guideline for Establishing Construction Contract Duration, 2010).

As for more specific review, the construction project management basically

implementing the construction contract administration which usually begins when the

owner-contractor agreement is executed and concludes when final payment is accepted

by the contractor. The actual start and completion times of a project are vary and it

depends on the specific requirement of the contracts between the contractor and the

owner. These services are sometimes provided by third parties. Lenders may have a

contract administrator to ensure that the lender‘s interests are being protected.

Construction project management is not the same as construction management since

there is an added participant in the process, who may be employed by the owner for pre-

14

construction services, construction services, or both. The contract documents identify

the procedures for communicating during construction, but unless the parties to the

contract fully understand their roles, the communication process will not be totally

effective (Davison and Mullen, 2009).

In a nutshell, contract administration is an important factor in project

performance, as this can be seen from the construction project performance that boosted

up by implementing a proper project contract management. Hence, an appropriate

project contract management and planning process is crucial in determining project

success.

2.5 CONTRACT CLAIMS

It is no doubt that an appropriate project management can increase the

organizational efficiency. Moreover, the profits in the organization can increase as well

about 3% to 5% through project management; by contrast, the profits will boost 10% to

20% through claim management (He and Chen, 2010). Generally, if the claim

opportunities in an engineering project are identified and analyzed early, the success

rate of claim is about 93%. Thus, the claim identification in the international project is

an important content and segment in the work of the contractor's claim management.

According to Ovegoke (2006), during a construction project, delays may be

caused by various factor such as the owner; the contractor. Besides, the act of God may

contribute to it, which includes force majeure, unpredictable weather conditions, a loss

or a damage occasioned by specified perils, e.g. an earthquake, a flood etc. In such a

situation the architect gives a fair and reasonable extension of time to the contractor.

While the third party of the project also may contribute, that includes a civil

commotion, a local combination of workmen, a strike or a lock-out affecting any of the

trades employed upon the works, a delay on the part of the nominated subcontractors or

suppliers, a delay in giving instructions to contractor, etc.

In fact, there are 6 main types of claims stated in Measuring the Efficiency of

Construction Claim Administration in Construction Companies in Egypt. First, claims

15

concerning the existence or applicability of the contract. Most claims concern matters

within the scope of valid contract, but situations may arise outside the scope of contract.

It consists of two scenarios: A binding contract was never established initially, and a

contract has ceased to bind. For a binding contract to come into existence there must be

agreement and intention to create legal relations when the binding contract was never

established initially. Problems commonly occur within the pre-contract period. If

agreement is eventually reached, the contract refers back to the start of the work. If the

contract has ceased to bind it may be declared void by a court due to possible challenges

to its validity. Such events rarely happen with standard forms of contract.

Second, claims arising from contract documentation. Assuming the contract is

valid, the actual contract documents applicable to that contract and the actual words

used in the documents will have a substantial effect on any claim. The contract

provisions must be construed as they actually mean. These provisions, however,

determine what the obligations and responsibilities of the parties are. Problems of

documentations generally occurred as shortcoming documentation where the documents

are prepared by people, and people are fallible. Besides, there are also implied terms

documentation where the importance of knowing the terms that are implied as standard

without neglecting the terms which are not implied, and ambiguities and discrepancies

documentation which can arise between documents, or within a given document. Most

forms of contract provide powers to resolve ambiguities and discrepancies as regards

work to be executed with possible adjustments for payment.

Third, claims arising in connection with execution of the work. Claims arising

in connection with the execution of the work concern the occurrence of the actual

events, both physical and non-physical, including the discovery that an assumption, as

to existing fact at the time of contract, was incorrect. There are three elements of this

type of claims. Variations occur when there is a tendency not to appreciate the

disruptive effect that a relatively minor variation can have on the work. Risks are the

modern conditions of contract allocate risks likely to be met in the course of the work to

one party or the other. While Defects is an important function of the employer's

appointees is to supervise the work as it ensures that defective work is replaced or

rectified before acceptance.